42 implementation of tds in tallyerp 9

8/14/2019 42 Implementation of Tds in Tallyerp 9

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Implementationof

TDS in Tally.ERP 9


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Version: Implementation of TDS in Tally.ERP 9/1.0/June 2009


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Contents

i

Contents

IntroductionScope & Applicability ............. ............... ............... ............... ................ .............. ............... ................ ....... 1

TDS Process ..............................................................................................................................................4

Time & Mode of TDS Payment ................................................................................................................5

Issue of TDS certificate ................ ............... ............... ............... .............. ............... .................. ............. ... 5

e-TDS Returns ..........................................................................................................................................6

Returns & Timelines .................................................................................................................................7

TDS Features in Tally.ERP 9 ................................................................................................................... 7

Lesson 1: Enabling TDS in Tally.ERP 9

1.1 Enabling TDS in Tally.ERP 9............. .............. ............... ............... ................ .............. ................. ... 9

Lesson 2: Transactions

2.1 Transactions Involving TDS .............. ............... ............... .............. ................ .............. ................. .. 16

2.1.1 TDS on Expenses (Journal Voucher) .......................................................................................................16

2.2 Payment to Party ............. ............... ............... ............... ............... .............. ................ ................ ...... 30

2.3 Payment of TDS ............... .............. ................ .............. ............... ............... ............... ............... ....... 32

2.3.1 Payment of TDS (Using TDS Helper) ......................................................................................................32

2.3.2 Generating TDS Challan (ITNS 281) ......................................................................................................36

2.4 Transactions Involving TDS .............. ............... ............... .............. ................ .............. ................. .. 41

2.4.1 Expenses Partly Subject to TDS (Journal Voucher) ................................................................................41

2.4.2 Accounting of Expenses and Deducting TDS Later ................................................................................522.4.3 Accounting Multiple Expenses and Deducting TDS Later ..................................................................... 61

2.4.4 TDS on Advances .....................................................................................................................................67

2.4.5 TDS on Expenses @ Lower Rate .............................................................................................................73

2.4.6 TDS on Expenses @ Zero Rate ................................................................................................................82

2.4.7 Surcharge Calculation on Prior Period Expenses ..................................................................................88

2.4.8 Surcharge Calculation on Expenses ........................................................................................................95

2.5 Adjustments in TDS .............. .............. ................ .............. ............... ............... .............. ................ 100

2.5.1 Reversal Of Expenses and TDS ............................................................................................................. 100

2.6 Accounting Changes in TDS percentage ............... ............... ................ ............... ................ ......... 105

2.7 Accounting TDS on Payments made to Non Residents ............. ................ .............. ............... ..... 105

2.8 Payment of TDS ............... .............. ................ .............. ............... ............... ............... ............... ..... 1112.8.1 Payment of TDS (Using TDS Helper) ....................................................................................................111

2.8.2 Generating TDS Challan (ITNS 281) ....................................................................................................115

Lesson 3: Reports

3.1 TDS Reports .............. .............. ............... ............... .............. ............... .............. ................ ............ 116

3.2 Computation .............. ............... .............. ................ ............... ................ .............. .............. ............ 117

3.2.1 TDS Computation Expenses Wise .......................................................................................................118


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3.2.2 TDS Computation TDS Paid ...............................................................................................................121

3.2.3 TDS Computation TDS Payable .........................................................................................................122

3.3 Challan Reconciliation .............. .............. ............... .............. ............... .............. ................ ............ 123

3.4 Return .............. ............... ............... .............. ............... ............... ............... ............... .............. ........ 125

3.4.1 Print Form 16A ......................................................................................................................................125

3.4.2 Form 26Q ...............................................................................................................................................127

3.4.3 Annexure to 26Q ....................................................................................................................................130

3.4.4 Form 27 Q ..............................................................................................................................................131

3.4.5 Annexure to 27Q ....................................................................................................................................132

3.4.6 Form 26 .................................................................................................................................................134

3.4.7 Annexure to Form 26 ............................................................................................................................. 136

3.4.8 Form 27 .................................................................................................................................................137

3.4.9 Annexure to 27 .......................................................................................................................................138

3.5 EReturns ............. .............. ................ .............. ............... .............. ............... ................ .............. ... 139

3.5.1 ETDS ....................................................................................................................................................1403.5.2 Form 26Q ...............................................................................................................................................140

3.5.3 Print Form 27A ......................................................................................................................................143

3.5.4 Form 27Q ...............................................................................................................................................145

3.6 Outstandings .............. ............... ............... ............... .............. ............... ............... ................. ......... 146

3.6.1 TDS payable ........................................................................................................................................... 146

3.6.2 Ledger ....................................................................................................................................................147

3.6.3 Nature of Payment .................................................................................................................................149

3.7 Exception Reports .............. .............. ............... ................ .............. ............... .............. ................ ... 151

3.7.1 Track Migrate Vouchers ........................................................................................................................152

3.7.2 Track Migrate Bills ................................................................................................................................ 152

3.7.3 Track Masters ........................................................................................................................................152

3.7.4 PAN Not Available .................................................................................................................................153

3.7.5 Unknown Deductee Type .......................................................................................................................154

Appendix 148

A.i Migrating TDS Data ......................................................................................................................148

A.i.i Pre Migration .........................................................................................................................................148

A.i.ii Vouchers considered for TDS Migration ...............................................................................................148

A.i.iii Migration Flow .....................................................................................................................................148

A.i.iv Data Errors ...........................................................................................................................................148

A.i.v Assessable Value & TDS Calculation .................................................................................................... 150

A.i.vi TDS Migration in different scenarios .................................................................................................... 151

A.i.vii Post Migration .....................................................................................................................................152

A.ii TDS Rates ............... .............. ............... ................ ............... .............. ............... .............. ............... 153

A.iii TDS Statutory Masters ................ .............. ............... ................ .............. ............... ................. ..... 156

A.iii.i TDS Nature of Payments .......................................................................................................................156

A.iii.ii TDS Collectee Types ............................................................................................................................ 158


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1

Introduction

TDS means Tax Deducted at Source. The concept of TDS was introduced in the Income Tax Act,

1961, with the objective of deducting the tax on an income, at the source of income. It is one of

the methods of collecting Income Tax, which ensures regular flow of income to the Government.

Example: Universal Infotech is making the payment towards Rent to the owner of the building, it

is required to deduct the tax on the income (i.e. before payment to the owner), at the source of

income.

Scope & Applicability

Scope

Tax deduction at source means the tax required to be paid by the assessee, is deducted by theperson paying the income to him. Thus, the tax is deducted at the source of income itself. The

income tax act enjoins on the payer of such income to deduct the given percentage of income asincome tax and pay the balance amount to the recipient of such income. The tax so deducted atsource by the payer is to be deposited in the income tax department account. The tax sodeducted from the income of the recipient is deemed payment of income tax by the recipient atthe time of his assessment.

For example: Person responsible for paying any income which is chargeable to tax under thehead 'Salaries' is required to compute the tax liability in respect of such income and deduct tax atsource at the time of payment. If the employee has any other income, he needs to inform theemployer so that employer can take that income into consideration while computing his tax liabilitybut he will not take into account losses except loss from house property.

Similarly, person responsible for paying any income by way of 'interest on securities' or any otherinterests are required to deduct tax at source at the prescribed rates at the time of credit of such

income to the account of the payee or at the time of payment, whichever is earlier.


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Introduction

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Applicability

Tax will be deducted at source based on the rate defined in the Act, only on the fulfilment of thebelow mentioned conditions.

1. The Assessees (includes individual & HUF as covered U/S 44AB) carrying on business isdeducting the tax at the Time of Payment or Credit, (whichever is earlier) against following typeof Recipient (Deductee)

Individual

Hindu undivided Family (HUF)

Body of Individual (BOI)

Association of person (AOP)

Co-Operative society

Local Authority Partnership firm

Domestic company (Indian company)

Foreign company

Artificial Judicial Person

2. The nature of payment belongs to any one of following list

Nature of Payment Nature of Payment

Salaries Interest on Securities

Dividend Interest other than securities

Winnings from lottery or crossword puzzles orcard game or other game

Winnings from horse races

Payment to sub-contractors Insurance commission

Payments to Contractors (Advertisement Con-tractors)

Payments to Contractors (Other thanAdvertisement)

Payment to NonResident sportsman or sportsassociation

Payment in respect of deposits underNSS

Payment on account of repurchase of units ofMF or UTI

Commission on sale of lottery tickets

Commission or brokerage Rent of Land, Building or FurnitureRent of Plant, Machinery or Equipment Fees for professional or technical serv-

ices

Payment of compensation on acquisition of cer-tain immovable property

Payment of Any other income to a non-resident

Income from units to an offshore fund Income of foreign institutional investorsfrom securities


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Introduction

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As per Sec 44AB, Individual and HUF is also considered as assessee

under Income Tax Act, if such Individual and HUF

Carrying on Business, where the total sales, turnover or gross receipts

from the business exceeds Rs. 40 lakhs in any Previous Year

Carrying on Profession, where the total receipts exceeds Rs. 10 lakhs

in any previous year

3. The payment exceeds the TDS Exemption Limit specified in the Income Tax Act.

Fees for Tech. Services Agreement is made

after Feb. 29, 1964 before April 1, 1976

Fees for Tech. Services Agreement is made

after Mar 31, 1976 before June 1, 1997Fees for Tech. Services Agreement is madeafter May 31, 1997 before June 1, 2005

Fees for Tech. Services Agreement is madeon or after June 1, 2005

Income by way of Long-Term Capital Gains Income from Foreign Currency Bonds orGlobal Depository Receipts (GDR)

Income from Foreign Exchange Assets paya-ble

Interest payable by Government or Indianconcern in Foreign Currency

LongTerm Capital Gains Royalty(f) Agreement is made after May 31,1997 before June 1, 2005

Royalty(f) Agreement is made before June 1,1997

Royalty(f) Agreement is made on or afterJune 1, 2005

Royalty(g) Agreement is made after March 31,1961 before April 1, 1976

Royalty(g) Agreement is made after March31, 1976 before June 1, 1997

Royalty(g) Agreement is made after March 31,1997 before June 1, 2005

Royalty(g) Agreement is made on or afterJune 1, 2005

ShortTerm Capital Gains


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Introduction

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TDS Process

A seller (Deductee) provides services to the buyer (Deductor).

The buyer deducts the Tax at the time of payment of advances or while accounting the Billsreceived.

The buyer deposits the deducted amount to the designated branches of the authorisedbank

The buyer issues Form No.16A to the Deductee

The buyer files annual returns electronically to the Income Tax department.

The seller files returns, along with Form 16A claiming the credit of the Tax deducted atsource.


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Introduction

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Time & Mode of TDS Payment

All the Tax deducted during a month are to be paid to the credit of Government on or before

7th of the next month. In case 7th of the month happens to be a sunday or a bank holidaypayment can be made on the next working day

TDS amount shall be paid to the government account through any designated branches ofthe authorised banks, along with Income Tax Challan No.281.

In case of collections made by or on behalf of the Government, the amount shall be cred-ited within the time and in the manner aforesaid without the production of a challan.

Issue of TDS certificate

TDS certificate is a proof that deductor has deducted the tax and paid the same to the govern-ment. This proof is essential to the deductee to claim the credit of tax in his Income Tax returns.

U/s 203 of Income Tax Act, any person deducting the tax as per the provisions of

*Section 192(Salary) shall furnish a certificate of Deduction of tax in Form 16or Form16AA within one month from the close of Financial year in which such deduction wasmade.

Example: For the Financial Year 2007-2008, the TDS certificate must be issued on orbefore 30th April, 2008

*Section 193, 194, 194A, 194B, 194BB, 194C, 194D,194E, 194EE,194F, 194G, 194-I,194J, 194K, 194LA, 195, 196A, 196B, 196C and 196Dshall furnish a certificate of Deduc-tion of tax in Form 16A with in one month from the end of the month during which the credithas been given or the payment has been made, as the case may be.

Example: For deductions in May 2008, TDS certificate must be issued on or before 30thJune, 2008

In case of deductee to whom more than one TDS certificate was issued for the deduc-tions made during the year, may on request from such deductee, a consolidated cer-tificatein Form 16Amay be issued wihtin a period of one month from the close ofsuch financial year.

ReferAppendix for details on the *Sectionsmentioned above.


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Introduction

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e-TDS Returns

The Income Tax department has now notified Electronic Filing of Returns of Tax Deducted at

Source Scheme, 2003. It is applicable to all deductors furnishing their TDS return in electronicform. As per this scheme,

It is mandatory for corporate deductors to furnish their TDS returns in electronic form (e-TDS return) with effect from June 1, 2003.

For government deductors it is mandatory to furnish their TDS returns in electronic form(e-TDS return) from financial year 2004-2005 onwards.

Deductors (other than government and corporates) may file TDS return in electronic orphysical form.

Deductors furnishing TDS returns in electronic form (e-TDS) have to furnish Form 27A. Form 27A

is a control chart to be furnished in physical form along with CD/ Floppy containing the e-TDSreturns. Form No 27A is required to be furnished separately for each TDS return.

Form 27A is a summary of e-TDS returns which contains control totals of Amount paid andIncome tax deducted at source. The control totals mentioned on Form 27A should match with thecorresponding control totals in e-TDS returns.

Electronic Filing of Returns of Tax Deducted at Source (e-TDS), is explained

in detail in Reportschapter.


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Introduction

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Returns & Timelines

The following Returns are required to be filed under TDS :

Figure 1.1 Table showing Forms & Returns under TDS

TDS Features in Tally.ERP 9

Tally.ERP 9s TDS Feature enables you to handle all the functional, accounting and statutoryrequirements of your business in an accurate and simplified manner. The TDS functionality inTally.ERP 9 has the following features

Simple and user-friendly

Quick and easy to set up and use

Create single Expenses Ledger for Multiple Nature of Payment

Create single TDS Duty Ledger for Multiple Nature of Payment

Book & Deduct TDS in the same voucher

Single TDS deduction for multiple vouchers

Single TDS deduction for Multiple Nature of Payments

TDS deduction on partial applicable value

Financial

Year

Form No. Particulars Periodicity

2008-09 Form 26 Annual return for deduction of tax inrespect of payments other than salary.

Annual

Form 27 Annual return for deduction of tax inrespect of payments other than salarymade to Non-residents.

Annual

Form 27A Physical control charts containing controltotals mentioned in TDS returns fur-

nished electronically. Form 27A in physi-cal form to be submitted along with e-TDS annual return forms.

With each e-TDSreturns Form 26 and/

or Form 27.

2008-09 Form 26Q Quarterly return for deduction of tax inrespect of payments other than salary.

Quarterly

Form 27Q Quarterly return for deduction of tax inrespect of payments other than salarymade to Non-residents.

Quarterly

Form 27A Physical control charts containing controltotals mentioned in TDS returns fur-nished electronically. Form 27A in physi-

cal form to be submitted along with e-TDS quarterly return forms

With each e-TDSreturns Form 26Qand/or Form 27Q.


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Introduction

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Retrospective Surcharge Deduction

Party wise configuration for Lower / Zero rate

Party wise configuration to Ignore IT / Surcharge exemption Limit Deduction of TDS on advance payments

TDS deduction on Non-Resident (Sec.195) payments

Reversal of TDS

Print TDS Challan (ITNS 281)

Print Form 16A

Generate E-TDS Returns

Print Form 27A

Print Form 26, 26Q, 27, 27Q with Annexure(s)

TDS Computation Report Generate TDS Outstanding and TDS Exception Reports


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9

Lesson 1: Enabling TDS in Tally.ERP 9

Lesson Objectives

On completion of this lesson, you will learn to

Create Company in Tally.ERP 9 Enable TDS in F11: Features

1.1 Enabling TDS in Tally.ERP 9

It takes a one-time configuration in Tally.ERP 9 for TDS features to be activated. Follow the stepsgiven below to enable TDS in Tally.ERP 9 for a new company, M/s. Universal Infotech.

1. Create Company

2. Enable TDS

M/s. Universal Infotech, is a Company Resident, which is engaged in Software Develop-ment.

Step 1 : Create Company

Go to Gateway of Tally>Alt + F3: Company Info.> Create Company

In the Company Creationscreen,

Specify Universal Infotechas the Company NameandAddress details

Select Indiain the Statutory Compliance forfield

Specify the State, Pin code & Accounts with Inventorydetails

To enable TDS for Companys which are already created in Tally.ERP 9,

follow the instruction provided under the head Enable TDS.


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Enabling TDS in Tally.ERP 9

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The Completed Company creationscreen appears as shown

Figure 1.1 Completed Company Creation Screen

For complete details on Company Creation refer Tally.ERP 9 Help, topic

Creating Company in Tally.ERP 9


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Step 2 : Enable TDS

To enable TDS Feature, for a company

1. Activate TDS Feature2. Enable Set/Alter TDS Details

3. Specify the Company TDS Deductor Details

4. Enter Companys PAN / Income Tax No

To enable TDS Featureforuniversal Infotech

Go to Gateway of Tally > F11: Features > F3: Statutory & Taxation

Set Enable Tax deducted at SourcetoYes

Enable Set/Alter TDS DetailstoYes

TheStatutory & Taxationfeatures screen appears as shown.

Figure 1.2 F11: Statutory & Taxation Features


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Press Enter, the Company TDS Deductor Details screen displays

Figure 1.3 Company TDS Deductor Details Screen

In the Company TDS deductor Details, enter the TDS Deductor Details such as:

Tax Assessment Number (TAN) : TAN is a TENdigit alphanumeric number Issued by theIncome Tax Department (ITD) to the deductor, which must be quoted on all Challans, Pay-ment for TDS, Certificates issued in Form 16/16A, Returns and in all documents and other

correspondence with ITD.

Income Tax Circle /Ward(TDS): Income Tax Circle/Ward, in which the deductors areassessed for Income-Tax (TDS) with TAN of each person.

Deductor Type: According to the nature of the organisation Deductor type will be selected.In case ofGovernment, the option Governmentwill be selected as the Deductor Type andif the deductor is Non-Government body, Others will be selected.

Name of the person responsible:Person responsible means the person who is author-ised to file the TDS returns of the company.

Designation: Mention the designation of the authorised person filing TDS returns.

The Format of TAN is AAAA*55555A, WhereA* is the first character of the

name of the Organisation.

Example: TAN of Universal Infotechis KARU07884F


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The completed Company TDS Deductor Details screen appears as shown

Figure 1.4 Completed Company TDS Deductor Details screen

PressEnterto Accept

Enter Permanent Account Number (PAN No.) and other details.PAN is 10 Digit Alphanumeric numberalloted by the Income Tax Department to all the taxpayers whose incomeis taxable.

The completed F11: Statutory & Taxation screen appears as shown

Figure 1.5 Completed F11: Statutory & Taxation Screen

Press Enterto Accept.


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Lesson 2: Transactions

Lesson objectives

On completion of this lesson, you will learn to

Record Basic TDS Transactions Record Advanced TDS Transactions

Make TDS Payments and generate TDS Challans

This lesson is divided into Twoparts

1. Part I Recording Basic TDS Transactions

2. Part II Recording Advanced TDS Transactions


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Part I


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Transactions

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Recording Basic TDS TransactionsIn this section we shall emphasis on understanding how Tally.ERP 9s TDS feature can be effec-

tively used to record basic TDS transactions to generate TDS Challan.

Let us take the example of Universal Infotech (Created and TDS enabled, as discussed in theearlier chapter) to record TDS transactions such as

TDS on Expenses

Payment to Party

Payment of TDS

Generating ITNS 281 Challan

In Tally.ERP 9, you can account for expenses implying TDS with the help of Payment Voucher,

Journal Voucher or Purchase Voucher, as required.

2.1 Transactions Involving TDS

2.1.1 TDS on Expenses (Journal Voucher)

Under this, we will learn to Account expenses and deduct tax at source to arrive at the Netbalance payable to the party.

Example 1:

On 1st April, 2008 Universal Infotech received a Bill (vide No. 001) from Pheonix Agencies for Rs.5,00,000 towards the Advertisement services rendered.

To account the above transaction follow the steps given below

1. Create Masters

i. Expense Ledger

ii. Party Ledger

iii. Tax Ledger

iv. Bank Ledger

2. Record the Transaction in Journal Voucher


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Transactions

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1. Create Masters

i. Expenses Ledger

Create Expenses Ledger

Go to Gateway of Tally > Accounts Info. > Ledgers > Create

1. Type Advertisement Expenses as the Ledger Name

2. Select Indirect Expensesin the Under field

3. SetIs TDS ApplicabletoYes4. In Default Nature of Paymentfiled select Payment to Contractors (Advertisement

Contractors) from the List of TDS Nature of Pymt.

All the Payments/Expensessubject to TDShave to be associated with

relevant predefined TDS Nature of Payments.

ReferAppendix for more details on TDS Nature of Payments

Figure 2.1 Ledger Creation Screen

Ledger Under IS TDS

Applicable

Default Nature of Payment

Advertisement Expenses Indirect Expenses Yes Payment to Contractors(Advertisement Contractors)


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Transactions

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The completed Expenses Ledger screen is displayed as shown.

Figure 2.2 Completed Expenses Ledger Creation Screen

Press Enterto Accept

The Option Any can be selected from the List of TDS Nature of Pymt,where the user doesnt want to define the TDS Nature of payment during

Ledger creation. This allows the user to use an Expense Ledger (as a

common ledger) to account multiple TDS Nature of Payments.


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Transactions

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ii. Party Ledger

Create Party Ledger

Go to Gateway of Tally>Accounts Info. >Ledgers > Create

Setup:

Before creating the party ledger enable the following options in F12: Configure (Ledger Config-uration)

Set Allow ADVANCED entries in MasterstoYes

Set Use ADDRESSES for Ledger AccountstoYes

Figure 2.3 F12: Configure

In the Ledger Creationscreen,

1. Type Pheonix Agencies as the Ledger Name

2. Group it under Sundry Creditors group

3. Set Maintain Balances bill-by-billtoYes

4. Specify the Default Credit Period, if required

5. Set Is TDS DeductabletoYes

6. In the Deductee Type field select Association of Persons from the List ofDeductee Types

Ledger Under Maintainbalances

bill-by-bill

Is TDSDeductable

Deductee Type

Pheonix Agencies Sundry Creditors Yes Yes Association of Persons


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Transactions

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iii. Tax Ledger

Create Tax Ledger



1. Type TDS Contractors as the Ledger Name

2. Group it under Duties & Taxes group

3. Select TDSas the Type of Duty/Tax

4. Select Payment to Contractors (Advertisement Contractors) as the Nature ofPayment.

5. Set Inventory values are affectedto No

The completed TDS Contractors ledger screen is displayed as shown

While creating ledgers under Sundry Creditors or Sundry Debtors, ensureMaintain Bill-wise Detailsis set to Yesin F11: Accounting Features.If the

party is a Non Resident Deductee type, then PIN Code, State and the

Sales Tax Numberfields are not applicable.

Ledger Under Type of

Duty/ Tax

Nature of Payment Inventory

values areaffected

TDS Contractors Duties & Taxes TDS Payment to Contrac-tors (AdvertisementContractors)

No


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Transactions

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1. Type Canara Bank as the Ledger Name

2. Group it under Bank Accounts group3. Under Mailing Details

In Addressfield enter the Bank Branch Address.

Select appropriate state in Statefield.

In Pin Codefield enter the pincode of the City

In Account Number field enter the account number as 00758978

In Branch Namefield, enter M.G.Road.

Enter the Banks BSR Codeas 0240130. BSR Code is a 7 digit Number allotted byReserve Bank of India(RBI) to Bank Branch.

Enter Rs. 50,00,000 in Opening Balancefield

The Completed Canara Bank ledger screen is displayed as shown

Figure 2.7 Completed Bank Ledger Creation Screen

4. Press Enterto Accept.


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Transactions

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Go to Gateway of Tally > Accounting Vouchers > Press F7: Journal

1. Press F2and change the date to01-04-2008

2. Select Advertisement Expensesin the Debitfield and press Enter

3. Enter 5,00,000 in the Amountfield.

4. Select Pheonix Agenciesin the Creditfield and press Enter.

The TDS Details screen is displayed as shown

Figure 2.8 TDS Details Screen

In the TDS Detailsscreen provide the following details

Type of Ref.: Select New Reffrom the method of Adjustment. Tally.ERP 9 displays TwoMethods of Adjviz., Agst Ref and New Ref.New Refis selected for new Financial Trans-actions Where as, Agst Refis selected to set off payment against the previously entered

invoice. Name: This filed display the Reference Numberfor the TDS Deducted. The default Refer-

ence Number displayed, is a combination of abbreviation of Journal, Voucher Number andLine Number. Example :Jrnl / 1-1which can be changed by the user. TDS payments aretracked with these Reference Numbers.

Nature of Payment: Select Payments to Contractors (advertisement Contractors) inNature of Payment field. The Listof Nature of payments displays only that Nature of Pay-ments which is specific to the Expenses Ledgers, selected in the transaction.


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Example: For the above transaction List of Nature of payments displays only Payments toContractors (advertisement Contractors), as the nature of payment applicable to the Partyagainst which TDS will be deducted.

Figure 2.9 TDS Details Nature of Payment Selection

TDS Duty Ledger: Select TDS Contractorsfrom the list of TDS Duty Ledgers. List ofTDS Duty Ledgersdisplays, ledgers created with specific nature of payment as well as theledger created with the optionAny.

Assessable Amount: Tally.ERP 9 defaults the amount specified against the expensesledger and skips the field.

Deduct now: This field will be set toYes or Nodepending on the tax deduction. Set thisfield toYesto deduct the Tax in the same voucher.

TDS Amount: This field displays the Tax amount deducted at source

Payable Amount: This field displays the amount (after TDS) payable to the Party.


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The completed TDS Detailsscreen is displayed as shown

Figure 2.10 Completed TDS Details Screen

5. Press Enterto accept TDS Details

6. Payable Amount as calculated in the TDS Details screen will be defaulted in thePartys Amount (Credit)field. Press Enterto view Billwise Details screen.

7. In Billwise Detailsscreen,

Select New Ref as the Type of Ref

In the Name field enter the Bill name as Bill - 001

Skip the Due Date or Credit Daysfield

Accept the default amount allocation andDr/Cr. By default Tally.ERP 9 displays theBill amount in the amount field as the credit balance.

Press Enter, select New Ref as Type of Ref and Enter Bill name as Bill -001

Skip the Due Date or Credit Daysfield and accept the default amountallocation andDr/Cr. By default Tally.ERP 9 displays the Tax amount in the amount field as the debitbalance.

The Completed Billwise Details screen is displayed as shown


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Figure 2.11 Billwise Details Screen

In the above method of bill allocation, Tax amountis deducted from the Bill amountto arrive atthe Pending amount to be paid to the party. This method of bill allocation updates the bill

amount along with pending amount to be paid to the party, in the Outstanidings statement,which helps the user to identify the Bill amount in the outstandings statement, when the requestcomes from the supplier for payment.

8. In the Credit field select the duty ledger TDS Contractor from the List of LedgerAccounts and Rs. 5150 (500000 - 494850) is displayed automatically in the amountfield.

9. Enter transaction details in the Narrationfield.


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The completed Journal Voucherisdisplayed as shown

Figure 2.12 Journal Voucher

10. Press Enterto accept

Journal voucher is generally used to record transactions on due basis i.e.,

firstly a due entry in favour of the party is created when the bill is received and

then at the time of settlement of the referred bill, a payment entry is passed.


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2.2 Payment to Party

Example 2:

On April 8, 2008, payment of Rs. 494850 is made towards bill no. Bill-001 to Pheonix Agencies forthe purchase of Advertisement services, vide cheque no. 254781

The same is accounted as follows

Record the transaction in Payment Voucher

Go to Gateway of Tally > Accounting Vouchers > Press F5: Payment

1. Press F2and change date to 08/04/2008

2. In Debitfield select Pheonix Agenciesfrom the List of Ledger Accounts

3. Enter Rs. 494850 in Amountfield and press enter to view Bill-wise Detailsscreen

4. In Bill-wise Detailsscreen

Select Agst Ref in the Type of Ref

Select Bill-001 from the List of Pending Bills in Namefield, Amountis defaultedautomatically.

Completed Bill-wise Detailsscreen is displayed as shown.


5. PressEnterto accept the bill adjustment.


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6. In Credit field select Canara Bank from the List of Ledger Accounts, Amount isdefaulted automatically

7. Enter Cheque No. 254781 in Narrationfield.

The completed Payment Voucheris displayed as shown

Figure 2.14 Completed Payment Voucher



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2.3 Payment of TDS

2.3.1 Payment of TDS (Using TDS Helper)

All the Tax deducted during a month is to be paid to the credit of Government on or before 7th ofthe next month. In case 7th of the month happens to be a sunday or a bank holiday payment canbe made on the next working day

TDS amount shall be paid to the government account through any designated branches of theauthorised banks, along with Income Tax Challan No.281.

Example 3:

On May 6, 2008, Universal Infotech, paid TDS of Rs. 5150 towards Advertisement Expenses, videcheque no. 056330 for the month of April, 2008.

The same is accounted as follows

Setup:

In F12: Configure (Payment Configuration)

Set Use Single Entry mode for Pymt/Rcpt/ContratoYes


Go to Gateway of Tally > Accounting Vouchers > PressF5: Payment

1. Press F2and change date to 06/05/2008

2. Press Alt+Sor click S: TDS Helper button on the Buttons Bar to view TDS helperscreen.

In the TDS HelperScreen

Deducted Till Date: In this field user may enter, till date of the period for which the TDSvalues should be computed and auto-filled.

Enter 30/04/2008as the Till Date.

Section: As per the Act, separate TDS challans to be submitted for the payment of taxunder each section. In this field, Tally.ERP 9 displays all theSectionsunder which, Taxdeducted is pending for payment.

Select Section 194C from the list of section.

Payment Codeof the Sectionselected for TDS payment will be printed on

the TDS Challan.


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Nature of Payments: Based on the section selected in the Sectionfield, Tally.ERP 9displays the section related nature of paymentsunder which, Tax deducted is pendingfor payment.

Select Payment to Contractors (Advertisement Contractors) as the Nature ofPayment

Deductee Status: Select the Deductee Status as Non Company.

Cash/ Bank: Depending on the mode of payment (Cash or Cheque) Cash or Bankledger will be selected.

Select Canara Bank from the List of Ledger Accounts.

The completed TDS Helperscreen is displayed as shown

Figure 2.15 TDS Helper Screen

The TDS transactions in a payment voucher can be entered for a particular

Deductee Status, using the TDS Helperbutton.


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3. Press Enterto accept the TDS helper

4. The Bank Name through which the payment is made and TDS payable amount (withthe respective bill details) will be auto-filled.

5. Set the option Provide DetailstoYesto enter TDS payment details

In the Payment DetailsScreen

From Date: In this field enter theFromdate of the period for which the payment is made

To Date: In this field enter the Todate of the period for which the payment is made

Cheque/DD No: In this field user can enter either the cheque or the DD No through whichthe TDS payment is made. In this transaction payment is made through cheque no.056330.

Name of the Bank: This field is provided to mention the name of authorised bank, where

the payment is made.

Figure 2.16 Payment Details List of Banks

Tally.ERP 9 displays the list of banks from where the user can

Select Not applicable, when the bank details are not applicable for a payment.

Select The banks which are already created to carry out the regular business

Select New Name New Name will be selected when the authorised bank throughwhich the payment is made is different from the regular bank where the depositaccount is maintained. The Bank name created here will not be available under the Listof Ledgers.

Select Canara Bankfrom the List of Banks.

Branch Name: Enter the bank Branch name in this field.

BSR Code: Enter the BSR code of the branch. BSR code is a 7 digit number allotted by

Reserve Bank of India (RBI) to bank branch.


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The Completed TDS Payment voucher is displayed as shown

Figure 2.18 TDS Payment Voucher

8. Press Enterto accept.

2.3.2 Generating TDS Challan (ITNS 281)

Tax is remitted to the government account through Challans. For making the TDS payment,Challan No. 281 is used.

In Tally.ERP 9 TDS Challan (ITNS 28)will be printed from the TDS payment voucher.

To print the TDS Challanfor the transaction entered on 06-05-2008

Tally.ERP 9 allows the user to enter TDS payment entry in double entry modealso.


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1. Press PageUpto go back to payment voucher entry

2. Click on Printbutton or Press Alt + Pfrom the payment voucher to view the Voucher Printingscreen

3. In the Voucher Printingscreen

Ensure Print as TDS Challanfield is set toYes

Figure 2.19 Voucher Printing Screen

To view the challan in a preview mode, click onI: With Previewbutton or press ALT+I

4. Press Enterto accept the Voucher Printing subscreen and to display the TDS Challan in PrintPreview mode.

5. Click Zoomor Press Alt+Zto view the TDS Challan

TDS Challan is displayed as shown


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Figure 2.20 TDS Challan

6. Click on Printto print the TDS Challan.


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Part - II


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Recording Advanced TDS TransactionsIn this section we shall understand how Tally.ERP 9s TDS feature can be used to process

advanced TDS transactions.

We shall learn to record advanced TDS transactions such as

Expenses partly Subject to TDS

Accounting of expenses and deducting TDS later

Accounting multiple expenses and deducting TDS later

TDS on Advances

TDS on expenses @ lower rate

TDS on expenses @ zero rate

Reversal of expenses with TDS and Reversal of TDS

Accounting changes in TDS percentage

Accounting TDS on payments made to nonresidents

Payment of TDS

Record all the transactions in the books of Universal Infotech.


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2.4 Transactions Involving TDS

2.4.1 Expenses Partly Subject to TDS (Journal Voucher)

In the event, where a part of the expenditure is not subject to TDS and the balance amount issubject to TDS, it is crucial to determine the accurate value of expenses for computation of TDS.

Tally.ERP 9 provides the flexibility to enter information in the same voucher. Consider thefollowing scenario to illustrate the Expenses partly subject to TDS.

Example 4:

On 7th May, 2008, universal Infotech received a bill (vide no. 911) from Sridhar & Co. for Rs.1,12,360 inclusive of other charges of Rs. 12,360 towards the auditing services provided.

In the above transaction Bill amount includes other charges of Rs. 12,360 on which TDS is notapplicable. Let us understand how to configure Tally.ERP 9 to compute tax only on the Assessa-ble Value (1,00,000).


1. Create Masters

i. Expense Ledger

ii. Party Ledger

iii. Tax Ledger


1. Create Masters

i. Expenses Ledger

Create Expenses Ledger

Go to Gateway of Tally > Accounts Info. > Ledgers > Create

1. Type Auditing Expenses as the Ledger Name

2. Select Indirect Expensesin the Under field

3. Select the appropriate Rounding Method.

4. SetIs TDS ApplicabletoYes

Ledger Under IS TDS

Applicable


Auditing Expenses Indirect Expenses Yes Fees for Professional OrTechnical Services


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ii. Party Ledger

Create Party Ledger



1. Type Sridhar & Co. as the Ledger Name





6. In the Deductee Type field select Partnership Firm from the List of DeducteeTypes

7. Enter the Mailing Details.

8. Under Tax Informationenter the PAN/IT No. (PAN/IT No. is mandatory for e-TDS).PANis a 10 Digit Alphanumeric Numberallotted by the Income Tax Department.

Ledger Under Maintainbalances

bill-by-bill

Is TDSDeductable

Deductee Type

Sridhar & Co. Sundry Creditors Yes Yes Partnership Firm

The sellers who are receiving the TDS nature of payments, are requiredto be associated with the predefined Deductee Types.

ReferAppendix for more details on Deductee Types

The option UnKnown will be selected, when the Patys deductee type

details are not available.


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The completed Sundry CreditorLedger screen is displayed as shown

Figure 2.22 Completed Sundry Creditor Ledger Creation Screen


PAN/IT No. field is restricted to 10 digits, user can enter any ten Numbers

or Alphabets or alphanumeric.

The details provided in the PAN/IT No.field must be equal to ten Num-

bers or Alphabets or alphanumeric. Tally.ERP 9 wont accept any details

less than 10 digits.

In case, where the PAN is not Availableor Applied For,such details

can also be provided in the PAN/IT Nofield in the format, as specified by

the Income tax Department.

For PAN not available enter as PANNOTAVBL

For PAN Applied - enter asAPPLIEDFOR

Under Exception Report PAN Not Available, Tally.ERP 9 displays all

the ledgers in which PAN/IT No is not mentioned. Before e-TDS valida-

tion user can check this report to make necessary changes in the ledger


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iii. Tax Ledger

Create Tax Ledger



1. Type TDS - Professional or Technical Services as the Ledger Name2. Group it under Duties & Taxes group

3. Select TDSas the Type of Duty/Tax

4. Select Fees for Professional or Technical Servicesas the Nature of Payment.

5. Set Inventory values are affectedto No

The completed Duty & Taxes ledger screen is displayed as shown

Figure 2.23 Completed TDS Ledger Creation Screen


Ledger Under Type ofDuty/ Tax Nature of Payment Inventoryvalues are

affected

TDS - Professionalor Technical Services

Duties & Taxes TDS Fees for Professionalor Technical Services

No


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Set Up:

In F12: Configure (Journal configuration) Set Allow Alteration of Nature of Payment in ExpensestoYes




2. Select Auditing Expensesin the Debitfield and press Enter

3. Enter 1,12,360 in the Amountfield and press Enter

The Expense Allocationscreen is displayed as shown

Figure 2.25 Expense Allocation Screen


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The TDS Nature of Payment Detailsscreen displays the Nature of Paymentand the Assessa-ble Valueof the expenditure.

PressEnter to accept Fees for Professional or Technical Servicesas Nature ofPayment.

The amount in the Assessable Valueis defaulted to Rs. 1,12,360. Enter Rs.1,00,000in the Assessable Value and press Enter.

Figure 2.26 TDS Nature of Payment Details with Assessable Value

In the Nature of Paymentfield select Not applicablefrom the List of TDS Nature ofPayment(balance amount of Rs 12,360 gets allocated automatically in the Assessable

value field)

WhenAllow Alteration of Nature of Payment in Expenses is set to Yes inF12: Voucher Entry Configuration, Tally.ERP 9 facilitates Assigning/

Altering Nature of Payments and Assessable Value of the Expenses during

voucher entry.

Assessable Valueis the amount on which the TDSwill be computed. In the

above transaction the Bill amount of Rs. 1,12,360 includes Service Tax of Rs

12,360 on which the Tax cannot be deducted. Thus assessable value is

arrived at by deducting Service tax from the Bill amount

Bill amount (1,12,360) Service Tax (12,360) = Assessable Value

(1,00,000)


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Figure 2.27 TDS Nature of Payment Details

4. Select Sridhar & Co.in the Creditfield and press Enter.


Type of Ref: Select New Reffrom the method of Adjustment. Tally.ERP 9 displays TwoMethods of Adjviz., Agst Ref and New Ref.New Refis selected for new FinancialTransactions Where as, Agst Refis selected to set off payment against the previouslyentered invoice.

Name: This filed display the Reference Numberfor the TDS Deducted. The defaultReference Number displayed, is a combination of abbreviation of Journal, VoucherNumber and Line Number. Example: Jrnl/2-1which can be changed by the user. TDSpayments are tracked with these Reference Numbers.

Nature of Payment: Select Not Applicable in Nature of Payment field. Assessableamount and Payment amount are defaulted as entered in Expense Allocation screen.

Figure 2.28 Nature of Payment as Not applicable


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Type of Ref: Select New Reffrom the method of Adjustment.

Name: This filed display the Reference Numberfor the TDS Deducted. The defaultReference Number displayed, is a combination of abbreviation of Journal, Voucher

Number and Line Number. Example: Jrnl/2-2which can be changed by the user. TDSpayments are tracked with these Reference Numbers.

Nature of Payment: Select Fees for Professional or Technical Services in Nature ofPayment field. Assessable amount and Payment amount are defaulted as entered inExpense Allocation screen.

TDS Duty Ledger: Select TDS Professional Or technical Servicesfrom the list ofTDS Duty Ledgers. List of TDS Duty Ledgersdisplays, ledgers created with specificnature of payment as well as the ledger created with the option Any.

Assessable Amount: Tally.ERP 9 defaults the amount as specified in the TDS Natureof Payment Details against the expenses ledger and skips the field.

Deduct now: This field will set toYes or No.depending on the tax deduction. Set thisfield toYesto deduct the Tax in the same voucher.

TDS Amount: This field displays the Tax amount deducted at source

Payable Amount: This field displays the amount (after TDS) payable to the Party.


Figure 2.29 Completed TDS Details Screen

5. Press Enterto accept TDS Details





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Press Enter, select New Ref as Type of Ref and Enter Bill name as Bill-911


The Completed Billwise Details screen is displayed as shown


The above method of bill allocation helps the user to identify the Bill amount in the outstanding

statement, when the request comes from the Supplier for payment.

8. In the Creditfield select the duty ledger TDS Professional Or technical Servicesfrom the List of Ledger Accounts and Rs. 10,300 (1,12,360 - 1,02060) is displayedautomatically in the amount field.

9. Enter transaction details in the Narrationfield


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2.4.2 Accounting of Expenses and Deducting TDS Later

It is always expected that, the deductor should deduct the tax in the same invoice in which the

expenses are accounted. But in some cases, deductor may follow the procedure of accountingonly expenses on the receipt of bills and later, deduct applicable tax on all such accountedexpenses in one invoice.

Tally.ERP 9 provides the flexibility to account expenses and later deduct tax on such expenses.Consider the following scenario to illustrate Accounting of Expenses and deducting TDS later.

1. Accounting of Expenses

Example 5:

On 8th May, 2008 Universal Infotech received a bill (vide No. 689) from Digitech Computers for

Rs. 25,000 towards commission charges.

The following example illustrates TDS transaction using a Purchase Voucher. Before recoprdingthe above transaction, create the following required ledgers.


1. Create Masters

i. Expense Ledger

ii. Party Ledger

iii. Tax Ledger

2. Record the Transaction in Purchase Voucher

1. Create Masters

As per the given information create masters.

i. Expense Ledger

Ledger Under IS TDS

Applicable


Commission Expenses Indirect Expenses Yes Commission or Brokerage

Inventory values are affected: No


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ii.Party Ledger

iii. Tax Ledger

2. Record the Transaction in Purchase Voucher (Acct Invoice Mode)

Set Up:

In F12: Configure (Puchase Invoice Configuration)

Set Use Common Ledger A/c for Item Allocationto No

Set Use Defaults for Bill Allocationsto No

Go to Gateway of Tally > Accounting Vouchers > Press F9: Purchase

1. Press Alt + I for Account Invoicemode


3. In Partys A/c Name field select Digitech Computers from the List of LedgerAccounts

4. Under Particulars select Commission Expensesand press Enter

5. Enter Rs. 25000in the Amountfield

6. Press Enterto view TDS Nature of Payment Detailsscreen and accept the defaultdetails in the screen.

7. Press Enter twice to view TDS details screen.

Ledger Under Maintain

balancesbill-by-bill

Is TDS

Deductable

Deductee Type

Digitech Computers Sundry Creditors Yes Yes Individual/HUF Resident

In Mailing Details:

Address: No-81/1, 8th main, Basaveshwaranagar, Bangalore.

State: karnataka

PIN Code: 560079

In Tax Information: PAN / IT No.: APRCL0497F

Ledger Under Type of

Duty/ Tax

Nature of Payment Inventory

values are

affected

TDS Commissionor Brokerage

Duties & Taxes TDS Commission or Brokerage No


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In TDS Detailsprovide the following information.

In Type of Reffield select New Ref

Namefiled display the Reference Numberfor the TDS to be Deducted. The defaultReference Number displayed, is a combination of abbreviation of Purchase, VoucherNumber and Line Number. Example: Purc / 1-1which can be changed by the user.TDS deductions are tracked with these Reference Numbers.

In Nature of Paymentfield select Commission or Brokeragefrom the List of Natureof Pymt(s)

In TDS Duty Ledgerfield select TDS Commission or Brokerage

Assessable Amount is defaulted to Rs.25000

Figure 2.32 TDS Details

The TDS Details screen is provided for an expenditure for which Tax is not deducted at the timeof accounting of expense, to provide the TDS details, which will be used as reference at the timeof cumulative deduction of Tax.

8. Press Enter to accept the TDS Details

9. In the Bill-wise Details screen

Select New Ref as the Type of Ref In the Name field enter the Bill name as Bill - 689



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Figure 2.33 Billwise Details


The CompletedPurchase Voucheris displayed as shown

Figure 2.34 Purchase Voucher


In Tally.ERP 9, all the transactions in which TDS is not deducted are displayed in TDS notDeducted Reportunder Exception Reports.


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The above transaction can also be accounted using Journal Voucher.

For more details on TDS Not Deductedreport refer Reports Chapter.

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Example 6:

On 12th May, 2008 Universal Infotech received a bill (vide No. 874) from Digitech Computers forRs. 40000 towards commission charges.

Record the transaction in Purchase Voucher (Acct Invoice Mode)




3. In Partys A/c Name field select Digitech Computers from the List of LedgerAccounts


5. Enter Rs. 40000in the Amountfield

6. Press Enterto view TDS Nature of Payment Detailsscreen and accept the defaultdetails in the screen.




In the Namefield, Tally.ERP 9 displays Purc / 2-1 as the reference number

In Nature of Paymentfield select Commission or Brokeragefrom the List of Natureof Pymt(s)


Assessable Amount is defaulted toRs. 40000

The above Details provided in the TDS Details screen will be used as reference at the time ofcumulative deduction of Tax.





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Record the transaction in Journal Voucher


1. Press F2and change the date to14-05-20082. Press Alt +Sor click on S: TDS Deduction button on the buttons bar to view TDS

Deductionsscreen.

In TDS Deduction screen

Till Date: In this field user may enter till date of the period for which the TDS to bededucted and autofilled.

Enter 14-05-2008as the Till Date.

Party: In this field Tally.ERP 9 displays the List of Party ledgersagainst whom theTDS deduction is Due.

Select Digitech Computersfrom the List of Ledger(s)

Figure 2.36 TDS Deductions Party Selection

Nature of Payment: Based on the Partyselected in the Partyfield, Tally.ERP 9 dis-plays all the party related nature of paymentsunder whichTDS deduction is pending.

Select Commission Or Brokeragefrom the List of Nature of Payments

Figure 2.37 TDS Deduction Nature of Payment Selection

3. Press Enterto accept the TDS Deductions4. The TDS amount with the respective bill details will be auto-filled.


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The completed Bill-wise Detailsis displayed as shown

Figure 2.39 Bill-wise Details screen

In the Bill-wise Detailsscreen, applicable TDS amount will be adjusted against the pending bills.


The CompletedJournal Voucheris displayed as shown




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2.4.3 Accounting Multiple Expenses and Deducting TDS Later

Under this, we will understand the accounting of multiple expenses (in the same voucher) and

deducting TDS later.Consider the following scenario to illustrate accounting of multiple expenses and deducting TDSlater.

1. Accounting of Expenses

Example 8:

On 18th May, 2008 Universal Infotech received a bill (vide No. 412) from Pheonix Agencies forRs. 2,50,000 towards

Commission Charges Rs. 50,000

Advertisement Expenses Rs. 2,00,000

Record the transaction in Purchase Voucher (Acct Invoice Mode)




3. In Partys A/c Name field select Pheonix Agencies from the List of LedgerAccounts


5. Enter Rs. 50,000in the Amountfield

6. Press Enterto view TDS Nature of Payment Detailsscreen and accept the defaultdetails in the screen and press Enter.

7. Under Particulars select Advertisement Expensesand press Enter

8. Enter Rs. 2,00,000in the Amountfield

9. Press Enterto view TDS Nature of Payment Detailsscreen and accept the defaultdetails in the screen and press Enter.




In Namefield, accept the default reference number Purc / 3-1

In Nature of Paymentfield, select Commission Or Brokeragefrom the List of Natureof Payments.


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Figure 2.41 TDS Details Selection of Nature of Payment

The List of Nature of payments displays the Nature of Payments which are specific to theExpenses Ledgers, selected in the transaction.


Assessable Amount is defaulted toRs. 50,000


InNamefield accept the default reference number Purc / 3-2

In Nature of Paymentfield, select Payment to Contractors (Advertisement Con-tractors)from the List of Nature of Payments.

Figure 2.42 TDS Details


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Here, the List of Nature of Paymentsdisplays only those nature of payments which are pendingfor selection.

InTDS Duty Ledger

field selectTDS Contractors

Assessable Amount is defaulted toRs. 2,00,000








The CompletedPurchase Voucheris displayed as shown

Figure 2.43 Completed Purchase Voucher



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2. TDS Deduction

Example 9:On 21st May, 2008 Universal Infotech deducted tax towards Commission and AdvertisementExpenses for the transaction dated 18th May, 2008.




2. Press Alt +Sor click on S: TDS Deduction button on the buttons bar to view TDSDeductionsscreen.

In TDS Deduction screen

Till Date: In this field user may enter till date of the period for which the TDS to bededucted and autofilled.

Enter 21-05-2008as the Till Date.

Party: In this field Tally.ERP 9 displays the List of Party ledgersagainst whom theTDS deduction is Due.

Select Pheonix Agenciesfrom the List of Ledger(s)

Nature of Payment: Based on the Party selected in the Partyfield, Tally.ERP 9 dis-plays all the party related nature of paymentsunder which, TDS deduction is pending.

User can select all the Nature of Payments (All Items) or any one of the Nature of pay-ment from the list, for TDS Deduction.

Select All Itemfrom the List of Nature of payments.

Figure 2.44 TDS Deduction Selection of Nature of Payment

3. Press Enterto accept the TDS Deductions

4. The TDS amount with the respective bill details will be auto-filled.


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Figure 2.45 Journal Voucher with Auto filled TDS values

The Total TDS of Rs.7210, includes TDS Contractors Rs. 2060 and TDS Commission orBrokerage Rs. 5,150 against Purc / 3-2 andPurc / 3-1 respectively.

5. In the Bill-wise Detailsscreen

Select Agst Ref in the Type of Ref

In the Namefield, Select Bill 412 dated 18-May-2008to adjust the TDSDeducted and press Enter

Accept the default amount allocation andDr/Cr.



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The completed Journal Voucheris displayed as shown




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2.4.4 TDS on Advances

The below examples illustrate the accounting of TDS on Advances and adjustment of such

advances against the Bill.

1. Accounting Advances

Example 10:

On 2nd June, 2008 Universal Infotech made an advance payment of Rs. 90000 to PheonixAgencies towards Advertisement Expenses through cheque (No. 025687). TDS is deducted whilemaking the payment.


Go to Gateway of Tally > Accounting Vouchers > PressF5: Payment

1. Press F2and change the date to 02/06/2008

2. In Accountfield select Canara Bankfrom the List of Ledger Accounts

3. Under Particularsselect Pheonix Agencies and press Enter

4. Enter Rs. 90,000in the Amount field and press Enter to view Bill-wise details screen

In Bill-wise Detailsscreen

In Type of Reffield select Advancefrom the Method of Adj

In Namefield enter the bill name asAdv 001

Skip the Due Date, or Credit Daysfiled. Amount is defaulted to Rs. 90000accept the same.

Figure 2.47 Bill-wise details Screen


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5. Press Enterto accept the Bill-wise Details

6. Under Particularsselect TDS Contractors (to deduct Tax) and press Enter

7. In TDS Details screen In theType of Ref field select New Ref

Name filed display the Reference Numberfor the TDS Deducted. The default Refer-ence Number displayed, is a combination of abbreviation of Payment, Voucher Numberand Line Number. Example: Pymt / 3-1which can be changed by the user. TDS pay-ments are tracked with these Reference Numbers.

Accept the default Reference Number (Pymt / 3-1)and press Enter.

In Nature of Paymentfield select Payment to Contractors (Advertisement Con-tractors)as the Nature of Payment.



8. Press Enterto accept the TDS Details

9. In the Amount field the TDS amount (Rs. 927)is displayed with negative sign

10. Enter 025687in the Narrationfield.


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The completed Payment Voucheris displayed as shown

Figure 2.49 Payment Voucher


2. Adjusting Advance against the Bill

Example 11:

On 15th June, 2008 Universal Infotech received a Bill (vide no. 982) from Pheonix Agencies forRs. 1,50,000 towards the Advertisement services rendered.




2. Select Advertisement Expensesin the Debit field and press Enter

3. Enter 1,50,000 in the Amountfield and press Enter


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4. In the TDS Nature of Payment Details, accept the default details.

5. Select Pheonix Agenciesin the Creditfield and press Enter.


In Type of Refselect Agst Reffrom the method of Adjustment, to adjust the advance(on which TDS is deducted) against the Bill amount.

In the Namefield Tally.ERP 9 displays the party related Pending Tax bills for selection.Select Pymt / 3-1from the List.

Based on the Tax Billselected, the details in the Nature of Payment, TDS DutyLedger, Assessable Amount and Payable Amount field will be defaulted automati-cally.

In Type of Refselect New Refto account the Balance Amount (60,000 = 1,50,000 -90,000)payable to the party, to deduct the TDS.

In the Namefield accept the default TDS reference number Jrnl / 5-2 In Nature of Payment field select Payment to Contractors (Advertisement Contrac-

tors)from the List of nature of Payment(s)

Select TDS Contractorsin theTDS Duty Ledgerfield.

Set Deduct nowfield toYesto deduct the Tax in the same voucher.

The TDS Amountfield displays the Tax amount deducted at source

The Payable Amountfield displays the amount (after TDS) payable to the Party.




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6. Press Enterto accept the TDS details



Select Agst Refin Type of Ref, to adjust the Advance against the Bill amount.

In theNamefield select Adv - 001from thePending Bills

In the Amountfield, Tally.ERP 9 displays Rs. 90,000, accept the default allocation andpress Enter.

Select New Refin the Type of Reffield to adjust the Balance amount payable to theparty.

In the Namefield enter the Bill name as Bill - 982


Accept the default amountallocation and Dr/Cr. By default Tally.ERP 9 displays theBalance Bill amount[1,50,000 Advance (90,000)] in the amount field as the creditbalance.

Press Enter, select New Ref as Type of Ref and enter Bill name as Bill -982


The completed Bill-wise Details is displayed as shown

Figure 2.51 Bill-wise Details Screen


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9. PressEnter to accept Bill-wise Details.

10. In the Credit field select the duty ledger TDS Contractor from the List of LedgerAccounts and Rs. 618(1,50,000 - 1,49,382) is displayed automatically in the amountfield.






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2.4.5 TDS on Expenses @ Lower Rate

Assessing Officer shall issue a certificate for deduction of Tax at Lower rate than the relevant rate

specified under the section, Where the assessing officer is satisfied that the total income of therecipient (Assessee) justifies the deduction of income tax at any lower rates than the ratespecified under sections specified under the Act and has received an application in Form 13 fromthe assessee under sub-section (1) of section 197.

The certificate granted shall be valid for the assessment year specified and is valid only for theperson named therein.

In Tally.ERP 9, the user can record and compute TDS on transactions, on which lower rate ofdeduction is applicable. Consider the following example.

Example 12:

On 25th June, 2008 Universal Infotech received a Bill (vide No. 260) from ACE Computers for Rs.

80,000 towards commission charges.

ACE Computers has a certificate for deduction of Income tax at Lower rate @ 5%, on Commis-sion.

To account the above transaction

1. Create Masters

i. Party Ledger

2. Record the Transaction in Journal voucher

1. Create Masters

i Party Ledger

Create Party Ledger


Setup:

Before creating the party ledger enable the following Configurations in F12: Configure (LedgerConfiguration)

Ledger Under Maintain

balances

bill-by-bill

Is TDS

Deductable

Deductee Type

ACE Computers Sundry Creditors Yes Yes Partnership Firm


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Set Allow Advanced entries in TDS Masters toYes.



1. Type ACE Computers as the Ledger Name





6. In the Deductee Type field select Partnership Firm from the List of DeducteeTypes

7. Set Use Advanced TDS EntriestoYesand pressEnter

Figure 2.54 Ledger Creation Enabling Advanced TDS Entries


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The Advanced TDS Entries screen is displayed as shown

Figure 2.55 Advanced TDS Entries Screen

In the Advanced TDS Entriesscreen

Set Zero / Lower Deduction: This field will be enabled when the Deductee has a certifi-cate issued by the assessing officer to Deduct Income tax at Lower Rate.

Enable SetZero / Lower DeductiontoYes(ACE Computer has submitted the Certificateto deduct income tax at Lower rate) and press Enter

Use Advanced TDS Entries field will be enabled in the ledger creation

screen only WhenAllow Advanced entries in TDS Mastersis set to Yes inF12: Voucher Entry Configuration.


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The Zero / Lower Deduction Detailsscreen is displayed as shown

Figure 2.56 Zero / Lower Deduction Details Screen

In the Zero / Lower Deduction Detailsprovide the following details

Nature of Payment: In this field, select the Nature of payment for which the lower rateof income tax is allowed.

Select Commission Or Brokeragefrom the List of Nature of Payment(s)

Section Number: In this field, Tally.ERP 9 displays the Sections, under which an appli-cation for lower rate or Zero rate are approved.

Select 197as the Section Number

Certificate No./ Date: In this field, enter certificate number and the date of issue.

Enter ADIT-17(1)/2008-09in certificate No./ Date field.

Applicable From: In this field, mention the date (as per the certificate) from when thelower rate is approved.

Enter 12-05-2008in Applicable Fromfield

Applicable To: In this field mention the date till when the certificate of Lower rate willremain in force.

Enter 31-3-2009in Applicable Tofield

TDS: In this field mention the Rate of Income Tax

Enter 5%in the TDSfield.


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Details in Surcharge, Ed Cess and Sec Ed Cessfields are defaulted automatically.

Figure 2.57 Completed Zero / Lower Deduction Details Screen

Press Enterto accept Zero/Lower Deduction Details.

Under Advanced TDS Entries, setDeduct TDS in Same Voucher if applicabletoYes.Deduct TDS in Same Voucher if applicableis enabled only when, the income tax will bededucted in the same voucher where the Due/ Payment is accounted for the party.

The Deduct TDS in Same Voucher if applicable screenis displayed as shown

Figure 2.58 Deduct TDS in Same Voucher if applicable


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In Deduct TDS in same Voucher if applicablescreen, user can select all the natureof payments or any specific nature of payment (applicable to the party) on which Tax tobe deducted in the same voucher.

SelectCommission Or Brokeragefrom the List of nature of payment(s)

Press Enterto accept the details in the Deduct TDS in same Voucher if applicablescreen

8. Enter Address, State and PIN Codeunder Mailing Details

9. Enter PAN/IT No.under Tax Information

The completed ledger creation screen is displayed as shown

Figure 2.59 Completed Sundry Creditor Ledger Creation Screen

10. Press Enter to accept.

2. Record the Transaction in Journal voucher

Go to Gateway of Tally > Accounting Vouchers > Press F7:Journal


2. Select Commission Expensesin the Debitfield and press Enter

3. Enter 80,000 in the Amountfield and press Enter


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4. In the TDS Nature of Payment Details, accept the default details.

5. Select ACE Computersin the Creditfield and press Enter.

In the TDS Detailsscreen provide the following details In Type of Refselect New Ref

In the Namefield accept the default TDS reference number Jrnl / 6-1

In Nature of Payment field select Commission Or Brokerage from the List of natureof Payment(s)

In Is Zero / Lower Rate, Tally.ERP 9 displays the Sections, under which an applicationfor lower rate or Zero rate are approved. Select 197from the List.

Select TDS Commission Or Brokerage in theTDS Duty Ledgerfield.

Deduct nowfield will be defaulted toYesand Tally.ERP 9 wont allow the user to alterthe setting.

Deduct nowfiled will be defaulted to Yes,when the option Deduct TDS in

Same Voucher if applicableis enabled in the Party Ledger for the Nature of

Payment (selected in the transaction).

The TDS Amountfield displays the Tax amount deducted at source

The Payable Amountfield displays the amount (after TDS) payable to the Party.

The completed TDS Detailsscreen is displ

42 implementation of tds in tallyerp 9

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